Rents have hit record highs across the country again, with unit rents rising much faster than houses.
According to the latest Domain Rent Report, combined capital city house rents lifted 1.9 per cent over the September quarter, and 12.8 per cent annually, while unit rents are up 6.5 per cent over the quarter, and 16.7 per cent annually.
Unit rents recorded the highest quarterly and annual growth on record, while the country is seeing its longest stretch of continuous rental price growth as house rents rise for the sixth consecutive quarter and unit rents for the fifth.
Domain’s Chief of Research and Economic, Dr Nicola Powell said the misalignment between supply and demand had resulted in increasing rents.
“Demand pressures have been caused by a combination of factors, including the lack of affordable home ownership, changing household formation and the return of skilled migrants and international students,” Dr Powell said.
“On the supply side, we have seen delays in building completions due to supply chain issues, weaker investment activity and the conversion to short-term rentals as tourists return.”
In Sydney, its record-breaking streak continued over the September quarter with house rents jumping 4.8 per cent to a record high of $650 a week, resulting in the steepest annual increase since 2009, at 14 per cent.
Unit rents are back at a record high of $550 a week for the first time since 2018, after a 4.8 per cent surge over the quarter.
Melbourne’s rental market has almost fully recovered from the pandemic-induced supply surplus and lowered asking rents.
Melbourne’s house rents increased 2.2 per cent over the quarter to a record of $470 a week.
Brisbane has experienced the longest stretch of continuous rental price growth on record, with house rents surging to a record $550 a week, while unit rents are now at $460 a week.
Brisbane is now the fourth most expensive city to rent a house for the first time in roughly six years.
Adelaide continues to reign as the most competitive capital city to find a rental in Australia, due to a supply problem exacerbating the rental crisis.
House rents increased 2.1 per cent in the quarter to $490 per week, while unit rents rose 5.3 per cent to $400 per week.
House rents are at a record in Perth, 11.1 per cent higher than last year, while unit rents jumped 5 per cent over the quarter.
In Canberra, the long-running streak of escalating rents came to an abrupt halt over the September quarter with house rents declining for the first time in just over two years, down 1.4 per cent, and unit rents remained steady at $550 per week.
Rental growth stalled in Hobart with the city’s record high rental prices staying steady at $540 per week for houses and $450 for units.
House and unit rents jumped in the September quarter in Darwin, with the median house rent rising 2.1 per cent to $613 per week, while units climbed 4.2 per cent to $500 per week.
Dr Powell said the consecutive run of interest rate hikes may have also pushed some landlords to pass on additional home loan costs.
“While it is still a very competitive market, on a positive note, we have seen suburbs report improved rent affordability, such as Macleod in Melbourne, Bellevue Hill and Collaroy in Sydney,” she said.
“Gross rental yields for houses and units are also improving and are at their highest point on record, so it’s a good time for investors to enter the Australian rental market, which will help alleviate some supply pressure.”
According to Dr Powell, there is no short-term solution to the high rental prices.
“Unfortunately there is no quick fix to alleviating conditions but there are solutions, if investor activity is encouraged, advance the build-to-rent sector and help tenants transition to home owner,” she said.
“If we encourage investors away from the short-term rental market and promote participation in social and affordable government housing programs through financial incentives, we will see some pressure ease in the rental market.
“We also need to see greater participation from the government through an increase in rent assistance for low income households, as this hasn’t risen in line with rents, and a stronger commitment to building more social housing.”
Dr Powell said there needs to be changes to planning laws to help alleviate supply issues.
“Although the government has committed to building more housing, we need to see further progress and a change in land use and planning rules to allow for more homes to be built in middle ring suburbs,” she said.
“If some of these issues are addressed, this will no doubt have a positive impact on easing rental conditions.”